Bankers want flexibility in short-term loan pricing

RBI deputy governor Subir Gokarn will meet CEOs of large commercial banks on Friday to finalise the draft circular on base rate — the new system proposed to calculate lending rates. Base rate will be calculated taking into account the cost of deposits, profit margin and establishment cost, among other things. Unlike the benchmark prime lending rate (BPLR), base rate will not factor in the risk element. The risk premium will be mark-up over base rate. Senior bankers told ET that they may seek RBI permission to give some of the short-term loans below the base rate. As per the draft circular, base rate will replace PLR and it will be the minimum rate below which banks can’t lend. The earlier draft by RBI stated that the base rate of most banks is expected to be in the range of 8.5-9.5%. Even if the base rate is in the range of 8-10%, banks fear they may lose business to mutual funds and non-banking finance companies as most corporates will look at cheaper ways of raising money. As of now, PLR of most banks is in the range of 11.75-12.25% and 70% of loans are given below PLR. For instance, banks have given short-term loans (six months to one year) to corporates at rates ranging from 7-10%, depending on borrowers’ risk profile while home loan borrowers are charged between 8% and 10%. Bankers said surplus liquidity in the system and poor demand for loan drove them to lend below PLR. State Bank of India has also suggested that banks should have the flexibility to lend below the base rate to their employees and for loans against fixed deposits. SBI provides home loan to their employees at a simple interest rate of around 6%. Also, it gives loan against FDs at a mark up over the FD rate. In fact, most banks provide loan to employees at much lower rate than their PLR. Banks are likely to ask for more time to implement the base rate system, which, according to the draft note, will come into effect from April 1, 2010. However, RBI deputy governor Usha Thorat recently told the media that the implementation of the base rate could get delayed. Bankers may also seek clarification on cost of deposit calculation. While the earlier draft said the one-year deposit rate should be taken into account to calculate the cost, the second draft just mentioned cost of deposits — thereby giving each bank the option to take average cost of deposits, one-year cost or the incremental cost. Bankers fear this may lead to a distortion in the base rate pricing.

Orissa implementing 32.6% investment proposals : Assocham

state government, which is higher compared to other states, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Releasing a Paper titled ASSOCHAM Strategy : “Creating and Sustaining Growth Momentum in Orissa” here on Wednesday at a press conference here by Assocham President, Swati Piramal and Secretary General, D S Rawat, however, said at the end of September 2009, the state had 486 live investment projects worth Rs 9.4 lakh crore. “This is 27% higher than the live investment reported as on September 2008”, Dr Piramal said adding that the respective shares of electricity, manufacturing, mining and services sector in total live investment are respectively 42.8%, 34.7, 56.6% and 6.3%. The Paper says that it is indicative of the fact that electricity, manufacturing and mining activities would become more prominent in Orissa in near future. “Projects that are presently put to implementation account for nearly 32.6% of total investments. During the three months period to September 2009, only one project involving Rs 24 crore was completed”, Dr. Pirama pointed out. Explaining the reason for the state having more than 65% of investment proposals at announcement stages, the Paper clarifies that lower implementation rate of projects, of late, has become a phenomenon across states in India. “ It may be noted that owing to the prevalence of global recessionary trends and slow down of the Indian economy investments across states have been kept on hold during 2008 and 2009. This explains the announcement stage of the major portion of investments announced. In case of Orissa, besides the slow down of the economy, the land acquisition has become a major hurdle of implementation of investment projects”, the Paper says.

Union Budget 2010: Cold-storage incentives to attract fresh funds

producer of fruits and vegetables, industry officials said. Wastage of fruits and vegetables due to poor post-harvest management and lack of cold chain facilities have been estimated to cost up to Rs 500 billion annually, as reported in the fifth and final report of the National Commission of Farmers. Finance Minister Pranab Mukherjee on Friday announced number of schemes to attract investment in the sector as he wants to bring down "difference between the farm gate prices, wholesale prices and retail prices." "External Commercial Borrowings will henceforth be available for cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat," Mukherjee said. "Once money starts coming through ECB route the investment size would be larger, which will expand the sector significantly," said Anjani Sinha, managing director and chief executive of National Spot Exchange Ltd (NSEL). The government also announced concessional import duty and exemption of service taxes for installation and commissioning equipment to promote mechanised handling in spot market.

Direct tax fetches Rs 2.78 lakh crore till Feb

The direct tax collections were up 7.52 per cent in the first 11 months against Rs 2.58 lakh crore in the same period last fiscal. The Finance Ministry officials are confident that direct tax collection target of Rs 3.87 lakh crore, revised from Budget estimate of Rs 3.70 lakh crore, for the current fiscal would be met as taxpayers are likely to give more than a lakh crore in the last month. The last installment of advance tax payment is also expected by March 15. Corporate taxpayers are required to pay 25 per cent and non-corporate taxpayers 40 per cent of their advance taxes in March. During February, growth in direct tax collections was 27.54 per cent on a year-to-year basis. The tax collection stood at Rs 14,675 crore against Rs 11,506 crore in February 2009. There had been a negative growth of 19.84 per cent in January. Corporate tax collections grew by 10.89 per cent to Rs 1.80 lakh crore in April-February compared to Rs 1.62 lakh crore in the 11-month period last year.

GST rate likely to be over 12%: Finance Ministry

by the task force set up by the 13 Finance Commission. The Finance Commission (task force) had recommended an overall GST rate of 12 per cent "but it is likely to be higher than that", Revenue Secretary Sunil Mitra said at a CII seminar here. He, however, clarified that he is not talking about the Central GST but the combined tax at the Union and state governments' level. The task force had recommended five per cent GST rate at the Central level and seven per cent at the state level. GST was earlier scheduled to be implemented from April 1 2010, but now the Cent GST will replace most the indirect taxes at central and states levels like service tax, excise duty, VAT, and local levies.

What Budget holds out for financial services

deficit. In the context of spiralling fiscal deficits run by governments in mature economies and mounting levels of government debt as a proportion of GDP in those economies, India had to seize the moment as well as the economic momentum that it is experiencing to rein in deficits and present a differentiated level of financial discipline that would sustain the confidence of investors and lenders to continue funding India’s growth. The Budget addresses this concern satisfactorily. At Rs 3,80,000 crore, the government’s borrowing programme for next year is pegged at levels below that for the current year. This should allay concerns of investments being crowded out by government borrowings along with adverse inflationary and interest rate expectations. And, by committing to progressively contain deficit levels and bring government debt down to 68% of GDP over the next few years consistent with the recommendations of the Thirteenth Finance Commission (TFC), and to bring out a paper on how this will be done in six months, the government sets out an agenda for fiscal reform that at least says all the right things. At Rs 40,000 crore, the government’s target for raising funds from disinvestments represents about 80% of funds raised from capital markets during 2009. This will permit investment banks to bolster their credentials, if not their bottom lines, and, if successful, ensure that the capital markets will see a substantial supply of equity paper. The India Infrastructure Finance Co (IIFCL) is expected to increase its funding of the infrastructure sector. Importantly, from a banking sector perspective, the FM expects IIFCL to develop a framework under which it will ‘take out’ financing extended by commercial banks to infrastructure projects; a working arrangement, if devised, would permit commercial banks to lend to infrastructure projects without creating material asset-liability mismatches. The continuing challenge, of course, is to ensure a sufficient supply of bankable infrastructure projects, something that is beyond the remit of the Budget. Tier-I capital of public sector banks is sought to be shored up to 8% by the end of next year, with the government injecting Rs 16,500 crore of additional equity. Working on an average government ownership in public sector banks at 60%, this would imply that the markets will see follow-on public offers for Rs 11,000 crore from this segment of the banking sector. While details are limited, the FM indicated that banking licences will be issued to private sector organisations, including NBFCs. Yes Bank was the last private bank to be granted a licence, and that was over five years ago. Given the conservative stance of the RBI on bank licensing, the number of private banks in the country is unlikely to swell materially in a hurry

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up the truck today and bought 30 million shares

IDCN, This little sub penny is set to fly, PSC backed up the truck today and bought 30 million shares
WE LOVE SUB PENNIES. THEY TRADE LIKE BANSHEES AND THEY MAKE OUR MEMBERS BIG DOLLARS.
Our last penny was WDRP which ran 387.5% from .008 to .039.
We have found our next fast moving sub-penny. The symbol is IDCN and we have taking in upon ourselves to alert members on this pick.
Just like WDRP, the momentum behind IDCN is going to build and make huge profits for fast moving members.
PSC is not working for IDCN. We just like the action and we think that if we get the right news flow, the pick could soar between 500% and 1000%.
Today, we called advisors close to IDCN and we got the low down on why the stock is trading so well.
From what we are told, there is some serious news coming down the pipe plus there is a major awareness program that is being finalized and should be kicked off very soon.
PSC alerted IDCN @ .009 today on our twitter link.

Reliance Capital ups stake in Fame to 11%

Reliance Capital ups stake in Fame to 11%
With the continuing share purchase, Reliance ADAG has fueled rumours of a counter-offer in Shravan Shroff's Fame India.

Govt must cut deficit starting next year: PMEAC

Prime Minister's Economic Advisory Council chairman C Rangarajan has set the policy tone for the finance minister Pranab Mukherjee. His message to the finance minister is strong and unambiguous – set the fiscal house in order April onwards.

gold has taken

The IMF's long-planned sale of its 403 tonnes of gold has taken on a new twist that may chip away at...

Finance Minister Pranab Mukherjee

As giants collapsed all around, India stood firm in the face of global recession. Now, as Finance Minister Pranab Mukherjee sets the fiscal agenda for...

Stock Market India, Free Tips in Stock Market, Stock Discussion Board

Online/Internet trading these days is a real boom for traders who wish to trade with their home comfort. Now almost every company in the field of stocks is giving this facility. However, these software are easy to use, but gives you a lot of facilities too. Earning from the stock trading is tedious and needs a foresight approach. Future trading and delivery trades are some what secured as compare to day trading.

What we recommend is to choose forex trading for future trading also. Forex Trading is really an alternative of shares and stock trading, but instead of trading shares, in Forex Trading, we will have to trade currency vs currencies. It is also called as Currency Trading. Forex Trading actually means FOReign Exchange Trading . We are sure you will find Forex Trading quite better than other alternatives. Also Forex Trading goes 24 hours a day instead of closing at some hours

The off-exchange foreign currency, or forex, market is a large, growing and liquid financial market that operates 24 hours a day. Forex Trading carries a high level of risk and may not be suitable for all investors. Forex Trading requires constant and expert monitoring.


To that end, here are 5 tips for Forex Trading.
For small accounts in Forex Trading in India especially ($25,000 and under), trade with the trend.
Have two accounts for Forex Trading in India. One real account and the other a demo Forex Trading account. Learning doesn't stop when trading real dollars begins. Keep the demo Forex Trading account and use it to test alternative trades, alternative stops, etc.
Examine daily charts, four-hour charts and one-hour charts to time your trades. While Forex Trading at 30- and 15-minute time increments is doable, it takes a great deal of dexterity.
Don't do Forex trade in the time frame. Trade the pattern. Revers